Hammack Advocates for Rate Hikes to Combat Persistent Inflation

Cleveland Federal Reserve Bank President Beth Hammack is advocating for higher interest rates to combat inflation, which has stayed above the Fed's 2% target for over five years. During an interview at the Federal Reserve's annual symposium in Jackson Hole, she stated that with inflation still running around 3%, 'I don't want to prejudge anything, but I believe now is the time to act.'

Hammack emphasized that current monetary policy is not restrictive enough, as businesses continue to borrow and do not view the prevailing interest rates as a meaningful obstacle. She warned that the longer inflation stays above target, the harder it will be to bring price growth back down and the greater the cost individuals and businesses may bear.

Her stance contrasts with officials who favor waiting for more data before acting, such as Boston Federal Reserve Bank President Susan Collins, who stressed that monetary policy must remain flexible. Hammack's latest remarks go further than her previous calls for rate hikes, emphasizing her assessment that financial conditions remain too accommodative and policy needs to be more restrictive.